tv Street Signs CNBC January 22, 2013 2:00pm-3:00pm EST
tyler? >> very interesting. thank you very much, that will do it for a tuesday edition of "power lunch." sue? >> markets holding up well. transports up 57 points. we'll follow the markets all afternoon. we'll see you tomorrow. "street signs" begins right now. hello. welcome to "street signs." call it debt ceiling spackle. why the newest development in the debt talks is much to do about nada. don't worry, everything's fine. one analyst who says don't bail on boeing just yet, tand why por phil mickelson is ready to pack his bags and get out of dodge. also a change is coming into your atm. there are no big moves in the markets, but the dow touched
its highest intraday level in over five years. it is on its best monthly gain since january of 2011, and part of this move is being fueled by historic highs for the dow transports for the fifth straight session. let's get straight down to courtney reagan on the floor of the nnysc. >> we are seeing the dow outperform, making it the fifth way that the transport also hit the historic highs. we have seen this pattern of the transports outperforming the industrials since the middle of december. airlines gained the most, up about 28% since the november 16th low. but if we look at stocks overall, you mentioned t not a super exciting day from the onset. we moved in a narrow range. we are still watching that 1500 level. as i look up now, we're within
shooting distance, but still about 18 points or so away from that. we'll see if we can get there. if we do, it's the first time since september of 2007. semis are dragging down the stocks. the philly semiconductor index is much lower than the nasdaq composite itself. two of the outperformers in tech, facebook and dell. we know that david faber has been breaking news on dell. seeing upside. there facebook up more than 3%. can't say that every day. back to you. >> we'll talk more about big tech firms later on in the show. thank you. in the world of politics and the debt squabbles that go with it, the white house said president obama would sign a short-term debt extension if passed by congress but he would favor a longer extension, right, john howard? >> exactly right. we've been talking for the last 24 hours about the aggressiveness and assertiveness
of the president's inaugural speech, some in your face lines going after republicans. jay carney in his briefing did indicate the white house is prepared to take yes for an answer on some issues, even if it can't get its entire way. debt ceiling as an example, they wanted a year or more on the debt limit, republicans are saying now through mid-may they will suspend the application of the debt ceiling. jay carney saying if that happens, the president will not stand in the way. here's jay. the bill still has to overcome some concerns expressed by members of the house and senate before it can pass both chambers and reach the president's desk. if it does reach the president's desk, he would not stand in the way of the bill becoming law. >> this is the president trying to resolve the jitters of the market over this and the potential threat to the economy. we have to first see whether or not house republicans can pass
this proposal. there is some uncertainty about that. one member of congress told me he thought some members on the right might take it down. once that happens, we have to see what happens in the senate. clearly the president is sending a positive signal of encouragement to republicans that this is the kind of compromise i'm looking for. >> john, we were saying this at the top of the show, it's short-term spackle. it is not solving anything at all. we're pushing it out, kicking it down the road. >> that is true, but it's significant that the republicans broke the link between raising the debt limit and dollar for dollar spending reductions. john boehner articulated that principle in 2011. that became a huge barrier to the debt limit in 2011, because getting those cuts identified was very difficult, would probably be impossible now. that's why the president came out after the election saying not playing that game. not going to renegotiate.
the white house is now prepared to say they concede on that principle for three months, we'll keep our stance unchanged beyond that, and republicans will yield again and we'll get a longer-term extension. >> hopefully it will diffuse market fears about a debt default. the question is what the markets have to say about these gyrations in washington. let's bring in the president of official funds, gentlemen, great to have you with us. >> grit to eat to be here. >> the dow is on multi-year highs, at what strange will wall street say the heck with it. >> the point i like to make in comparison is what happened in december of 2007 and the first part of 2008, the dow industrial average was lagging the
transportation average, which was raging forward. and the recession had already begun in december of 2007. the point i would make is neither the market nor the dow jones transportation average has been a good predictor of recessions turning. that's the case as well. >> do you agree with that, michael? not a good predictor? >> i would to some degree. in the short-term you can have rising stock prices. if you think about it, corporate earnings have been strong. there's a solid foundation on sock prices, good, supportable dividends. the uncertainty for the moment has gone away. in the long-term, though, stocks are independent. the growth of companies, the goods and services produced are dependent on a healthy economy. so they will come down eventually if we don't get our economic house in order. >> when it comes down to fundamentals and companies, michael, would you say it's a pivotal earnings season now and so far we've been beating on top
and bottom line? >> far it's been a pleasant surprise. there's a lot of companies beating in a variety of industries. that's further helped the market up. the big question is probably outlooks and the uncertainty or the certainty but negative issues going forward. so far earnings have been good. as long as earnings are good and growing, then you do have a solid foundation for u.s. stocks. when you look around the rest of the world at some of the issues out there that are negative, the u.s. market looks even better. and if worldwide growth begins to occur again as we may be seeing the beginnings of, that will bode well for u.s. companies that participate globy and potentially propel stock prices forward. cautiously positive here. >> what's your catch phrase? >> as john talked about just now, and you responded, we don't have much resolve yet on the debt ceiling. we are just kicking the can down the road to may.
let's say the president has accepted it. we are still going to have a fight after that. we also have no resolution on the sequestration which will cut spending savagely effective march 1st. so those two are already having a negative impact on consumer sentiment, businesses find it difficult to make investment plans amid this uncertainty. >> to that point, what's the alternative? if you don't want to invest in the united states because of uncertainty, do you go off shore and do you miss out because you're climbing the wall of worry? >> i think you should be in the united states, i think this is the best address in an overall bad neighborhood, but you want to be cautious. i say be defensive on the u.s. equity side. consumer staples. and on the equity side, the fixed income side, you have high grade fixed income like u.s. treasuries, they refuse to go over 2% on the ten-year. i think they'll go down further. whether you're talking about
german bonds, uk, you have more of a rally in high grade fixed income ahead. >> okay. >> those are the areas which will be good in the short-term. i wouldn't disagree with michael in the longer term. i think you have more optimism once this is crossed. >> so short-term you're playing defense. would you play a little bit more offense, michael? do you have some picks for us? >> we would on the equity side. we run a multi asset class fund. so we have defensive positions in other areas, maybe commodities, some bonds. our equities are more growth-based, more volatile, higher beta, aggressive in leverage. so we like the transports which are doing well lately. we like materials, we like energy, financial services, state street back on the financial services side, illinois tool works on the u.s. manufacturing side, fedex and kansas city southern was in the news today as well on the transport side.
we're more aggressively leveraged in our stock picks. >> thank you very much for stopping by. >> good to be here. on deck, a little trivia here for you. is it's taken the equivalent of 1001 trips to the moon and dak what is it? and one analyst says don't bail yet on boeing. stick around. own way. with scottrade's smart text, i can quickly understand my charts, and spend more time trading. their quick trade bar lets my account follow me online so i can react in real-time. plus, my local scottrade office is there to help. because they know i don't trade like everybody. i trade like me. i'm with scottrade. (announcer) scottrade. voted "best investment services company." ♪ [ male announcer ] every car we build must make adrenaline pump and pulses quicken.
1970, the boeing 747 went on its first regularly scheduled flight from new york to london. since then the 747 fleet has logged the equivalent of 101,000 trips to the moon and back and flown more than 4 billion people. a quick fix to the dreamliner drama seems more and more unlikely. fill lebeau has more on the widening investigation. what is the latest on this? >> what we're looking at now are the ntsb and the jtsb, the japan version of the transport safety board looking further at the suppliers. today the ntsb is in tucson, arizona. they're doing some tests down there. why are they in tucson? one of the suppliers to the 787 is a company called secure plane. scour plane makes chargers for the 787 litheon ion batteries. we called to get a comment from
them today. she said they are not commenting. i want to show you shares of boeing again. let's go back to january 7th. we want to show this it's down 5%, and some people might be saying why isn't it down more? in part because they've been able to, for the most part, ride out any concerns regarding dreamliner production. at this point they have not changed plans regarding moving dreamliner production from 5 a month to 10 per month. they have halted deliveries, but that's a fact of if you can't get it up in the air you can't get it to customers. if it's just coming down to compensating the airlines for lost flights, the damage might be $125 foregrounding costs. if it's a redesign or remanufacture, maybe 250 million to 625 million. if there's slower deliveries, perhaps 355 million. those are just estimates. nobody knows how long this grounding might last.
finally, looking at al nippon airways. they were the launch customer. they have more dreamliners than any other airline. they have canceled 320 dreamliner flights through january 29th. the fact they canceled through the 29th, that's an indication there that they are not expecting this grounding to be lifted any time soon. >> phil, stay right. there i want to bring in the boeing analyst at morningstar. neil, if i own boeing stock what should i do right now? >> i guess i would be selling shares. we think it's worth about $73. >> okay. why? why would you be selling shares? >> i think boeing shares generally trend best with order books. they had some astounding numbers for the order books. the industry as a whole has. airbus and boeing have over 9,000 aircraft that have yet to be delivered. how many airlines can continue to order?
i think the current fleet is about 20,000 current aircraft in service. so half of it is booked out. even though boeing thinks 34,000 aircraft are needed over the next 20 years, there's already a lot in backlog, most people look at the order growth and put a multiple on it. if orders slow, the boeing stock should not get the same pe multiple. >> phil was outlining the estimated potential costs. there were three different scenarios there. do your numbers jive with what phil put out? could it be worse? >> i guess we took a run at the position is more design related. one thing we would see is higher inventory levels, because you couldn't deliver the aircraft are fixed. we thought that would be about 10% to 12% of boeing's stock price, so 73 to about 64, maybe the low to mid 60s. these are all ranges.
i don't have any real ideas. that's a decent number. i don't know if the 100 million or 500 million thrown out there are in line with that. if we see a slow down in that, the growth for the overall company will slow down. do i want to pay a multiple for that? >> whether or not it threatens the expansion. phil, this is a huge company, one of the nation's biggest exporters and has a lot of clout in washington as well. does that clout get negatively effected by this? >> i don't know if it gets negatively effected. most people in washington, even those who boeing has influence with, they're looking at this saying hands off until the investigators figure out what's wrong with the dreamliner. it's hard to sit there and say, boy, let's leverage some of that influence in washington. there's no doubt boeing did not want to see their airplane grounded. they believe they have a safe aircraft and that lithium-ion
batteries are safe to use. having said that, now that this has happened and ray lahood has made it clear he doesn't want this thing up in the air until the issue is resolved, there's not a whole lot politically boeing can do in wraug. >> neil, we were saying a lot of this is due to the battery maker, the japanese company, but it seems it's going so much further than a faulty battery or an overheating battery. where else should we be pointing fingers if not at boeing? >> i don't know the answer to that question. i would say the electrical system as a whole, we had that issue during test flights in november of 2010, it was grounded in texas. they had to look at that. who knows if that's where this is going. the onus is on boeing, the ntsb and faa to get this plane back up. when we didn't have this grounding, it was going to be fly until something happens. now we have sort of stopped this and who knows how long this will
take. as ray lahood was saying, we have to be 1,000% sure. i'm not sure that's possible. you have to be 1,000% sure before this is okay. the onus is on testing trying to find a root cause and make sure we know what's going on. >> go over everything with a fine tooth comb. thank you very much neil and phil. still ahead, why honey boo boo is celebrating a big change to atms. and phil mickelson is mad as hell and he won't take it anymore. he says uncle sam is threatening to take 60% of his money. ♪
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change is coming to an atm near you. literally. jpmorgan chase and pc banks are rolling out new generation atms that can spit out any denomination you choose, singles, fives and exact change to the dollar. chase already rolled out between 350 and 400 such atms over the past 18 months that number is expected to double by the end of this year. the fees will be the same as for traditional atms, but chase's rationale for the change is delivering a more personalized banking service without hiring more tellers. phil mickelson is teed off about taxes. he is threatening to leave
california thanks to a higher tax rate on the wealthy. we will talk to robert frank about this in a minute, but first, jane wells, does he have a point? >> the wonder is why he stayed so long, except san diego is a nice place. florida is nice, too. mickelson will pay california a new rate of 13.4% retroactive to the beginning of last year. running the numbers, "sports illustrated" estimates he made 60 million in 2012, that means 64 million in ju 6.4 million in california taxes, and he owes an extra 1.8 million. but if he moves, california loses everything. some of those smaller tournaments may leave the state if golfers decide to golf at
rival events. tiger woods and the williams sisters long ago left california for florida, maybe not for tax purposes but they haven't moved back. lebron james went to the heat instead of the heat so the clippers could save tens of millions over his contract. and taxes were in the conversation when peyton manning was debating going to san francisco or the broncos. if we're not careful, california could have a fridge situation, who could be california's gerard depardieu, and now the daily mail is reporting nicolas sarkozy may even move to london. this may bolster the argument if you raise tacks too much people modify their behavior. >> talking about modifying behavior, do you think we'll see some massive wealth flight or when you weigh out the costs of moving elsewhere it's just not worth it? >> you look at those numbers that jane put out which are staggering. $8 million that he will pay in
taxes. remember, people in california have seen their tax rate increase by 7.9 percentage points just in the last three months. when you're making millions, this starts to get to be a big number. academic research shows that people generally do not move just for tax reasons. there was a study done on california that found when you look at the change in the millionaire population, only 1% of those millionaires moved for tax reasons. we like to complain and we all hate paying taxes -- >> does it give a reason why? >> largely family issues are a large part. you're going tell your kids and wife we're packing up and moving because i don't want to pay so much in taxes. >> among psychological costs. >> it found things like divorce played a much larger role in california when it came to where people moved. just a straight dollar look at your family finances makes sense to move to california, families
usually say, no athletes it's easier because they spend so much time on the road. again, it comes down to family issues. people don't move as much as you think. having said that, this is the biggest tax increase we've seen in single state in a long time. looking at past experience may not be a guide. >> it may be different this time. and we should mention mickelson did regret saying this. he said this is my personal opinion. >> he did. i think another thing he will regret is saying that -- he said i pay 62% or 63%. no one pays that. i spoke to so many -- >> so the math is wrong. >> the math has got to be wrong. unless he's including property taxes or some other thing. i've spoken to so many accountants who say the most he is probably paying is 50% 52%. >> but he's the first high-profile californian to complain about the tax hike and i don't think he'll be the last.
it is street talk sign. we have here greenberg here. let's get to some stocks. first of all insurer travelers which is moving higher today. this morning it was the s&p 500's biggest percentage gainer today. it crashed street estimates, that's important here. it saw a quarterly rise in premiums and renewals. and we have research in motion continuing it's comeback. i would like to show you an
interesting 112-month chart. it is a perfect u-shaped recovery. back to where it was about 12 months ago. the ceo says the ongoing review could lead to the sale of its ha handset business or the licensing of its smartphones. >> this is what i've said in the past, buy on the introduction of the rollout blackberry 10 and sell on the news. >> this is all the expectation built in. >> built in, and then will they stem the tide of not just defections but people coming back from the iphone and android and other devices. >> magic jack is down. the company is facing a class action lawsuit for allegedly making misleading statements about its business and policies. the law firm said magicjack overstat
overstated earnings and financials. >> this is a fascinating story, the ceo of this company, the founder of this company, is really a colorful guy. he will talk to anybody who calls him. he says all the things they're saying about his company are false. class action lawsuits, i'll tell you, when i see a class action lawsuit, i don't get that excited. you have to wait for the amendment to see if there's really good stuff. >> in the meantime, we have krispy kreme doughnuts. our own jim cramer said on friday its stock is likely to do well. cramer said it's due to a healthier menu option, such as you can get herb oatmeal, yogurt now. >> that's not story of krispy kreme. i was driving home and heard jim and i say that. we go way back to when this was a controversial company.
the company put a poison pill in place, they have broad plans for huge -- 76% store growth or thereabouts between here and 2017. that makes it a store growth story. everybody who knows me knows i don't like to hear projections put out to 2017 because so much can happen from here to there. the most important part of this story, i wish i could sit down with krispy kreme management and i should, how will they avoid this over expansion issue they had before, when what was so special became so prevalent. >> like when they expanded to australia. >> it's different management now. it will be a great story to follow going forward. >> i believe that is an invitation, wouldn't you say? krispy kreme management f you're watching, come on and we'll have a chat. chipmaker amd also very much in the news today because it's another story tied to the slowing pc industry. we've been talking about dell, and there are now reports saying
they lihired two senior enginee who have experience at qualcomm and other areas, it wants the non pc markets to account for up to 50% revenue within three, four years. wanting and delivering on are two different things. intel still has competition. we'll see. amd has been one of those stories for a decade or so. whatever. >> okay. we have two stocks that we plucked out forever your benefit, the first one is intuitive surgical which is moderately higher. 1% gain there. and it's reporting after the bell. >> this is one of the great battleground stocks of this year. what's interesting, a lot of talks about robotic surgery. we've seen it for years. intuitive has done such a great job.
>> a week ago, advancing gynecology worldwide, a research group came out with a report. the report basically came out and said that the available evidence shows the robotic surgery is not much more than regular lap scopic surgery for benign issues in gynecology. that's a big growth area for them. it's been a big growth area for them. >> and there's nuskin which we were talking about last week. a "new york post" article saying dan lobe is short newskin. >> he is either short or was short. it's an industry issue. i'll tell you this much. if he was or is short nu skin, you can't be long one and short the other. you are look at something that could impact the entire industries. there's something about the story that are off. nu skin, one of the most colorful stories out there, the former ceo -- not the former
ceo -- >> the husband of the former founderment. >> the former husband of the co-counter is out saying all sorts of things, including in a book saying that nuskin is a pyramid scheme. nu skin says it is not. it's one sexy tale after another. >> let's throw in soda stream as well. >> the stock has been rocked around on crazy rumors that david einhorn has taken a crazy position. there's some blog out there. this is the classic david einhorn story floated on any number of companies every month or two or three because they think it's a short sale. i bet his portfolio is more long than short for those who lay every name on him. >> this is like the company versus the product or -- >> you know what this is? >> i don't know about you, i love the product. the stock is a different story. >> who knows what's going on. i haven't paid attention. i know it's rubbish in the markets when people can easily
float this stuff. it gains traction. it's classic wall street. this is one of those classic wall street stories. >> you also got verizon announcing fourth quarter results today with mixed messages. there was superstorm sandy and rising benefit costs adding to net losses, but also saying they activated more iphones. let's bring in chris larsen. what did you think about the numbers? where do we go from here? >> i thought it was a decent quarter. at the end of the day, earnings were lower than we expected. that was disappointing. part of the reason, as you mentioned, was sandy. part of it was they sold a lot of iphones. got news about iphones, there's a lot of revenue from those customers down the road. you sign a two-year contract when you buy an iphone. you spend a lot of money per month. that's good for the earnings. >> didn't it hurt the margins, the introduction of the iphone
5? >> absolutely. it's interesting, about half the phones they sold were iphone 4's or 4s. in this business you have to lose a little up front to make a lot down the road. you get a $400 subsidy up front and then commit to $1,200 a year in revenues when you sign up and buy an iphone. >> subsidies is a big issue, especially the iphone subsidy, how long verizon will pay a premium in subsidies on the iphone verses what it might pay on other phones. on the call today, the cfo did start talking about, you know, there will be a reduction in subsidies. how did you interpret that? >> you know, nobody can tell you what they're going to do with apple. that's part of the rule with apple. you can't push that around. both at&t and verizon and all
the u.s. wireless carriers have been trying to push people over to android devices, push them over to a third device manufacturer, whether that's rim or the windows phone, they're hoping a third viable alternative comes out and pushes back on apple. can they push back on apple? maybe. i think the better leverage is to get a third or fourth viable operating system out there to help them put leverage on apple to reduce the prices. >> that takes some time. how will they achieve $2 billion in cost savings that they're looking for this year? >> yeah, a lot of nickels and dimes. we're talking about things like being stricter about how quickly you're allowed to return your phone. you buy a phone, two weeks later you bring it back. they're winding up subsidizing two phones on that. they want to be smarter about the phones. they want to be smafrtder about customer service. the other thing is they built this huge 4g network.
now they're beginning to load it up. there's not a whole lot of incremental extra costs with that. there's a lot to of extra revenue with not a lot of extra costs. >> you have a neutral rating with a target of 45 bucks, a couple bucks away from where it's sitting now. thank you very much for joining us. thank you, herb. also up next, checking in on what could be the next big thing for your portfolio. plus google ready to report after the bell. three things that every investor needs to search for in those headlines. ♪
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coming up on "closing bell" delta continues to lead the red hot airline index. are you better off betting on a laggard like southwest? we have both sides of that trade coming up. and a huge day for technology earnings. we will have the instant analysis and numbers from google, ibm and texas instruments. an one state is planning to tax hospitals to pay for the controversial expansion of medicaid. you will be shocked to find ourt which governor is behind that
push. michelle is raring to go. we will see you at the top of the hour for that most important hour of the trading day. >> let's find out what's happening at the nymex. there's a big development on the see stone pipeline. >> oil prices have closed here near the highs of the session, the highs of the year. the february contract expiring today above $96 a barrel, march is above 96.50. the big news is the governor of nebraska has approved a portion of the keystone pipeline that will avoid that environmentally sensitive sand hills area. there's been controversy from environmental groups about the contamination of water in that area. and they did not want the sand hills region to be impacted by the keystone pipeline. now there's a route around that. that will bring more crude oil into oklahoma, analysts are
saying that part of the reason why perhaps some of the market is seeing this as bullish is that it's going to create more of a global marketplace for u.s. oil. that's one reason why we're looking at oil prices here. state department has to review it, approve it and probably won't do so before the end of the first quarter. that's news traders are watching. we're keeping our eye on gasoline futures, that's a key driver in the gasoline complex, and prices at the pump are about $3.31 a gallon. if you're looking for a hot and hidden housing play, maybe check out hotel rates. simon hobbs has two of the industry's biggest players. >> welcome back to los angeles and to the biggest investor conference in lodging. an investor told me the only way to make money in hotels is to buy and sell them. there's a cycle. you have to know when to buy and
sell. hilton and starwood, they don't own their hotels, the hotels are often owned by reits, and they just rent the name. on the left we have the president and ceo of lasalle hotel properties. he has 40 wholly owned properties, on the right, ken cruz, president and ceo of sunstone investors. you have 30 hotels. >> yes. >> you are already in confession mode. your company made wrong decisions coming into the bad times. tell us about it? >> we cam public in the fall of 2004. during that time period, the company was far too tactical, aggressive, risk tolerant. we went into the down cycle, and didn't have the flexibility to create value during the last drop. value in our industry is created during cyclical inflection points. playing offense is the right way to play the game, playing
defense is the way to destroy value. >> you are very honest. >> ill-prepared. >> where are we in the cycle? there's a huge debate about that? >> i think we're in a sturdy part of the cycle. we had a bad situation a couple years ago with the deficit recession. the hotel business suffered dramatically. over the past couple of years, we've climbed out of it and had dramatic recovery in 2010, 2011 and 2012. we think we're still in a good spot in the recovery. we have a situation where demand is strong for the hotel business and supply is low and should stay low for a couple years. our perspective is it's a good time to be in the hotel business. >> is he right? >> right now there's a three-point spread between supply and the industry. very low supply means cycles should be longer. we're moving into the 37th month of recovery. our expectation is this will be a prolonged recovery.
>> somebody told me another four years. the second days of the cycle is when occupancies are high, rate growths are high and profit growth is considerable. so you're entering into a healthy phase. >> the other -- apart from buying and selling properties, the other decision you have to make is whether or not you will stand on your own, brand your own hotels, or pay hilton or starwood what are you paying service contracts? 12% of rev tenue for them to ru? >> typically 3% of revenue is a base fee. there's an incentive fee predicated on profits and licensing fees. >> what brands are you branded as? >> marriott, hyatt hilton. >> why have you decided not to take the branding route? >> we do both. we have 40 hotels, ten of them are branded, marriott, starwood, also 30 hotels are independently
managed. our perspective is that we have great operators who we work with that do a great job running the property and get the business in different forms. so we can be more successful. >> the problem is you were contained when you go into a downturn. there are stories of hoe tells where the big brands are going i'm sorry your contract says spend $250,000 for flowers for this lobby every year. they're screaming we can't afford this. >> most of the big brands that are major market sektders have evolved considerably over the last few years to where they think like owners. >> as a result of the downturn? >> absolutely and understanding that owners f you're going to punish the owners they'll go to a different model. not to the brand. when the relationship works well it can be profitable. >> day one of the conference, good luck. enjoy it. >> thank you. amanda, it's a fascinating
business. back to you. >> it s simon. you have fun. thank you very much for the interviews. next, the one thing that google should never ever ever do. [ man ] i've been out there most of my life. you name it...i've hooked it. but there's one... one that's always eluded me. thought i had it in the blizzard of '93. ha! never even came close. sometimes, i actually think it's mocking me. [ engine revs ] what?! quattro!!!!! ♪ quattro!!!!! try running four.ning a restaurant is hard, fortunately we've got ink.
spotted riding the subway over the weekend in new york sport aglipay of google glasses. the tech company's augmented reality eye wear. i wonder if they will catch on. meantime, google reports its fourth-quarter earnings an hour from now. what can we expect? let's bring in the principal at redesign mobile and our own herb greenberg. rocky, tell us the three most important things that investors need to know when, come out after the bell. >> the things that i happen to be looking for are what they say about social media because that's something they really struggled with in the past and facebook had their big product announcement last week with social search, which potentially can take a lot of the wind out of google's core business. i'm mostly looking for mobile numbers and how they are doing with the android devices. we saw today that apple came out or verizon came out with really strong numbers for the iphone, and then i'm looking for how
motorola does. >> motorola integration is key. do you think it was a mistake for them to get into the hardware business by buying motorola, rockne. >> motorola is something they had to do. looking back at mobile acquisitions, at least the big acquisitions have been smart ones. the smartphone wars are really coming down to patents and motorola had a whole load of patents that google needed to defend the android ecosystem. whether they will hold on to the handset business, a good question, something i could go either way on. they are probably using it as leverage against the samsung and hdcs to make sure they are delivering the right kinds of products that consumers want. >> one of the other questions is they have a bucket load of cash running into the billions of dollars, right, herb? the question is what are they going to buy next? >> i know what i think they should buy next and know what they should not buy next. rocky and i have talked about on what they should not buy next and where this comes up with is why people would think they would go out and buy a groupon is absolutely beyond me unless
they could get it for next to nothing, virtually next to nothing. you agree with me on that one, rock me. >> even if you get it for next to nothing, there's 10 plus million people at group on. >> i think they should buy linkedin and the reason is because on the social media side linkedin is very grown up, and it's a very high quality, high demographic group of people. i've been writing there for the past week or two, stunned by the level of the quality of the comments and the type of people who are reading their sort of linkedin. that would help google plus or integrate that into google plus, that would be really good. >> shot across the bow of facebook because when facebook came out with the graph surge, could be a threat to linkedin. what do you think, rock? >> facebook is in a much better position to get into search than google into social even with linkedin. linkedin has a very different
social graph than twitter or google does and i don't know how it helps to have the social graph which is professional oriented rather than search oriented. >> they had this split approved. i think it's been held up, right, delayed, but when you consider since their ipo back in 2004 their stock is up 728%, congratulations to those who got in early. should they split their stock? >> you know, i think it's something that is well worth considering given where the stock's gotten to this point. i would probably do it. >> really? >> why would you do it? why would they need to do that? what would be the big difference in the marketplace other than the smoke and mirrors of a stock price? why don't they just let it keep riding? what's it going to do. seen plenty of companies that don't split. >> unfortunately, smoke and mirrors matters. >> got to reef it there. herb and rocky. coming up next. how hot is too hot? we're going to see right after the break. ♪
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